Cheers! Why is the 'LOCAL AREA NETWORK' option in the Multiplayer menu greyed out?

It's grayed out because you're online, you can access it if you're offline.

How do you go offline?

Agreed, how do you do so? Do you have to cut you internet for this to happen?

Makes no difference if Galaxy is running or not. It will still be greyed out. The only way to get that box selectable is to pull the internet connection from that router. This really needs to be fixed, it borders on DRM.

As Hastur- said, you just need to log out of Galaxy. Galaxy stores your account's session token that Galaxy enabled games can access it at any time. Max Damage uses this for it's online interactions. It's not DRM of any sorts, the game just uses Galaxy's API for it's online functionality and Galaxy's API handles it in such a way that Galaxy doesn't have to be running for you to access Galaxy's services in a game as long as you're logged in.

The game's LAN and Online modes are literally identical apart from the fact Online uses Galaxy for server lists, player names, inviting people to games, etc. while LAN mode does not. If everyone in the game is playing on the same network then they should effectively be playing over the LAN and not pointlessly taking a trip out to the internet and back again.

I will try that, I thought when galaxy wan't running I was logged out. Thanks

Yes, I explained in my post that it keeps the your logged in account information available to it's games at ALL times, that includes when it is closed. I apologize if that wasn't stated explicit enough for you.

I never told you to QUIT Galaxy. I told you to LOG OUT of Galaxy. Logging out clears that account information so games can not access Galaxy's API so they are treated as offline. So why don't you give that a try yourself.

You clearly have no idea what DRM actually is if you think this is DRM, it is literally nothing to do with DRM. As I also explained, both LAN and Online options do literally the same thing and the main functional difference is whether it uses Galaxy to find servers or not, that is it. It doesn't matter which you use at all, both options will play over the LAN if you are only playing with people on the same LAN. It. Makes. No. Difference.